EUR/USD Price Forecast: Euro surges above 1.18 with 1.20 back in play

EUR/USD price outlook: dollar collapse, safe-haven rotation and a decisive breakout

EUR/USD: breakout above 1.1800 as the Dollar suffers its sharpest weekly hit since May

EUR/USD has shifted from sideways to trending. The pair is trading around 1.1811–1.1826, a four-month high, after slicing through the 1.1775 trendline that connected the September and December peaks and taking out the prior key high at 1.1807. This move is not a grind; it rides the largest weekly sell-off in the US Dollar Index since May, with DXY down more than 1.6% on the week and testing the 97.50–97.70 band. That level sits just below the broken 98.00–98.15 support zone and just above the next structural floor around 97.10–97.25. The trigger was a mix of softer US macro, easing inflation expectations and an intervention-driven flush in USD/JPY that spilled across the entire dollar complex. Against that backdrop, EUR/USD has broken a six-month congestion pattern and is now trading as a clean trend move, not a range trade.

US Dollar breakdown: DXY under 98.00 on weaker data and intervention fears

The dollar side is doing the heavy lifting. US Services PMI for January printed 52.5 versus 52.8 expected, unchanged on the month and still in expansion but clearly not accelerating. The S&P Global composite PMI nudged from 52.7 to 52.8, again growth but not boom conditions. At the same time, the University of Michigan consumer sentiment index climbed to 56.4 versus a consensus of 54, showing households less depressed but still complaining about high prices and a softer job outlook. Inflation expectations eased: one-year expectations slipped from 4.2% to 4.0%, and five-year expectations ticked down from 3.4% to 3.3%. That combination – softer inflation expectations with steady but moderating activity – allows the Fed to stay on hold and keeps rate-cut expectations alive for later this year. Fed funds pricing now implies roughly a 92–97% probability that the FOMC holds rates at the upcoming January 27–28 meeting; the risk is in the statement and Powell’s tone, not the rate level.
What turned a normal soft-dollar week into a full-scale flush was FX intervention risk. A Bloomberg headline on the yen – “jumps most since August as risk of intervention ramps up” – mentioned New York Fed “rate checks” with major banks. The market interpreted that as potential US support for another yen-support operation. DXY, already leaning lower, accelerated from around 98.33 to the 97.45–97.70 area as traders aggressively exited dollar longs. EUR/USD is simply the largest and most liquid expression of that unwind, and the pair’s 0.70%+ daily jump reflects how crowded positioning had become.

Eurozone data: soft services, fragile manufacturing, growth stuck near 0.1% but still enough for a stronger EUR

On the Euro side, the story is not a boom, it is “good enough when the dollar cracks”. Euro Area Services PMI fell from 52.4 in December to 51.9 in January, below the 52.6 consensus and signalling slower service-sector growth. Manufacturing PMI has improved from deep contraction levels and is flirting with the 50 line, hinting at marginal expansion. The composite picture is a bloc that is avoiding recession but is nowhere near robust growth. Consensus for Q4 2025 Eurozone GDP sits around 0.1% quarter-on-quarter. Upcoming GDP data for the bloc, Germany, France and Spain will confirm whether the region is flatlining or edging higher.
Politically and in rates, the ECB is in “patient but not panicked” mode. Inflation has eased enough to take the urgency out of further aggressive tightening, but growth is too weak to justify a sharp pivot to cuts. That stance keeps real yields in Europe low but stable. With the dollar side now under pressure from intervention fears and safer-haven rotation, even mediocre Eurozone data is enough to support EUR appreciation. The weekly G10 performance table shows EUR up about 1.97% versus USD, 0.05% versus GBP, modestly down versus AUD and NZD, and marginally weaker versus CHF. That is exactly what you expect when the dollar is the asset being sold, not the euro being chased at any price.

Safe-haven rotation: gold hits $5,009, silver goes triple-digit and the Dollar pays the bill

The most important macro context for EUR/USD right now is the violent repricing in metals. Gold has traded in a band around $4,964–$4,987 after hitting an intraday high of $5,009, with February futures settlement near $4,979.70. At one point, the metal was up almost 20% in 24 hours – an extraordinary move in a deep, global asset. Just days earlier, spot gold broke $4,900 for the first time; now the market is already talking about $5,400 and beyond. Silver has tracked the move and gone even further in percentage terms. It has vaulted through the $96 area and pushed into triple-digit territory, with perpetual contracts like XAGUSDT printing around 103.53, up more than 3.5% in a single session.
The performance gap versus other assets since Donald Trump’s November 2024 election victory is brutal: Bitcoin −2.6%, gold +83%, silver +205%, Nasdaq +24%, S&P 500 +17.6%. Metals are acting like the primary hedge against policy risk, sovereign debt and geopolitical stress; crypto is not. That is the key reason DXY has broken down. When global investors want insurance against a softening dollar, they are not primarily using Bitcoin at $89,400 – they are buying gold above $4,900, silver over $100, and in some cases tokenized gold exposure like XAUT.
Flows confirm the story. On Bybit, one trader moved 7 million USDT into 843 XAUT, about $4.17 million, to gain direct gold exposure at these record levels. Physical markets echo this. In India, local gold prices have hit a record 159,226 rupees per 10 grams and dealers are charging premiums as high as $112 an ounce over official domestic prices as buyers front-run a possible import duty hike in the February 1 budget. When household and central-bank demand is this insensitive to price, the marginal seller of dollars is not being replaced; the marginal buyer of metals is. The result is a sharp, broad sell-off in USD which EUR/USD is now pricing in via a breakout rather than a grind.

Crypto, Bitcoin forecasts and Marina Protocol: what matters and what doesn’t for EUR/USD

The crypto side of the tape is important as a contrast, not as a direct driver. Bitcoin is trading around $89,400.52 and struggling to reclaim the $90,000–$93,500 resistance zone. It remains about 30% below its October 2025 peak, despite the existence of a US spot ETF complex and a prior move above $100,000. The micro structure explains why: large long-term holders used the psychological $100,000 level as a distribution trigger, unloading enough supply to offset new ETF and institutional demand and cap the move.
Forecasts for BTC in 2026 are extremely wide. Ultra-bullish targets cluster between $150,000 and $250,000 from names like Charles Hoskinson, Robert Kiyosaki, Galaxy Digital, Arthur Hayes, Brad Garlinghouse, VanEck, JPMorgan, Tom Lee, Standard Chartered, Bernstein, Bitwise and Citigroup, with numbers ranging from $143,000 to $250,000. Cautious and bearish calls stretch from $75,000 (Jurrien Timmer at Fidelity) to $56,000–$70,000 (CryptoQuant), down to $25,000 (Peter Brandt) and $10,000 (Mike McGlone at Bloomberg). That spread shows that, unlike gold, there is no consensus on crypto as a macro hedge.
Altcoins highlight how skewed the risk is. Marina Protocol (BAY) trades at about €0.03438, up 20.74% in 24 hours and 60.78% over seven days, but still down 79.80% over the past year, with a market cap of roughly €6.88 million, a total and max supply of 1.00 billion BAY and 200 million in circulation. Bitget’s own technical screen labels BAY as “strong buy” on 4-hour and “buy” on daily, but “sell” on weekly – classic short-term squeeze inside a long-term downtrend. That is noise. For EUR/USD, the key takeaway from crypto is purely comparative: the clean, consensus hedge flows are going into gold and silver, not into Bitcoin or micro-caps. That puts the burden of adjustment on the USD leg and supports a stronger EUR as the main FX counterpart.

Technical structure: EUR/USD breaks out of its triangle with 1.1918 and 1.2000 back in play

Technically, EUR/USD has completed a textbook transition from congestion to trend. For roughly six months the pair was trapped in a symmetrical triangle / bull pennant. The base was carved around 1.1492–1.1592, with repeated defences of that zone. The upper boundary was defined by lower highs just shy of 1.1800 and then the failed attempt at 1.2000 around the last Fed cut. The descending trendline drawn off the September and December highs sat near 1.1775 and capped every rally – until this week.
Price has now closed above that 1.1775 trendline, above the 1.1807 December 24 high, and printed a new yearly peak at 1.1826. Daily RSI is firmly in bullish territory and not yet flashing a clear exhaustion signal. On the weekly chart, the structure has shifted from a maturing consolidation into an early uptrend phase: higher lows at 1.1492 and 1.1592, followed by a break to fresh multi-month highs.
Key levels are straightforward. On the upside, the first resistance band is 1.1850, followed by the 2025 high at 1.1918, and then the psychological 1.2000 round number. That 1.2000 zone aligns with prior failure when the Fed last cut rates, so a sustained break would be a regime shift, not just another extension. On the downside, the immediate support is at 1.1750. Below that, there is a cluster of technical cushions: 1.1717 (23.6% retracement tied to the 1.1492–1.1826 leg), 1.1748 and 1.1686 (longer-term Fibonacci pivots) and the 1.1669 swing low. As long as daily closes hold above roughly 1.1717–1.1750, the breakout thesis remains dominant. A loss of 1.1717 followed by a fall through 1.1686 and 1.1669 would downgrade the structure back to neutral and argue that the move was a false break driven purely by intervention noise.

Volatility, options and positioning: market is paying for a bigger EUR/USD range

Options and volatility confirm the regime change. One-month implied volatility on EUR/USD has jumped from roughly 6.5% to above 8.0% as the yen headlines and DXY collapse reset expectations for near-term ranges. For spot traders, that means 50–100 pip intraday swings without new data are now normal rather than exceptional. For options traders, it means higher premiums but also richer payouts for correctly positioned directional or volatility trades.
Positioning is being forced to adjust. Long-standing USD-long carry trades, particularly in USD/JPY, are now at risk of being unwound if interventions around the 160.00 handle intensify. The Bank of Japan still has its policy rate at 0.75%, but headline CPI has already dropped from 2.9% in November to 2.1% in December, and core inflation moved from 3.0% to 2.4%. That cooling inflation gives Tokyo room to intervene without seeming inconsistent. The more violent the USD/JPY unwind, the more forced selling of USD will spill into other majors, including EUR/USD. That is exactly what happened in Q3 2024 when the yen shock helped drive EUR/USD higher even without stellar Eurozone data.
At the same time, upcoming risk events are non-trivial. The Fed meeting, US durable goods orders and ADP data can all deliver a hawkish surprise that would push DXY off the 97.10–97.25 floor. On the Euro side, softer-than-expected GDP or an aggressively dovish tone from Lagarde and other ECB officials could cap the euro’s rally. The current pricing – EUR/USD above 1.1800, DXY below 98.00, gold near $5,000 – assumes policymakers avoid sudden hawkish shifts. Any deviation will show immediately in FX and metals.

Trading stance and directional call: EUR/USD is a Buy on dips while 1.1717–1.1750 holds

The combined macro and technical picture argues for a clear bias. The dollar has just posted its largest weekly loss since May, with DXY breaking the 98.00–98.15 floor and leaning on 97.45–97.70, with 97.10–97.25 as the next structural support. Gold has printed an intraday high at $5,009 and is holding in the $4,964–$4,987 zone, silver has pushed into triple-digit territory, and physical and tokenized flows show investors are willing to pay premiums – $112 per ounce in India, multi-million USDT tranches into XAUT – to get gold exposure. Bitcoin at $89,400 is lagging, trapped below $90,000–$93,500, with whales having sold heavily around $100,000 and the price still about 30% below its 2025 peak.
On the Euro side, data is mediocre but stable. Services PMI at 51.9, composite PMI at 52.8 and a 0.1% consensus for Q4 2025 GDP are not numbers that justify a strong euro on their own, but they are enough when the opposing currency is under attack from intervention risk, safe-haven rotation and tariff uncertainty. Technically, EUR/USD has completed a breakout from a six-month triangle, taken out the 1.1775 trendline, closed above 1.1807 and printed new highs at 1.1826, with a clear path toward 1.1850, 1.1918 and potentially 1.2000 if DXY cracks 97.10–97.25 and the Fed stays away from hawkish surprises.
Against that backdrop, the directional stance is straightforward: EUR/USD is a Buy with a bullish bias, with dips toward 1.1750–1.1717 viewed as opportunities to add rather than exit, as long as price holds above that support band on daily closes. The initial upside focus sits at 1.1850, with 1.1918 as the next objective and 1.2000 as the psychologically important extension if dollar weakness persists and metals continue to attract safe-haven flows.
If EUR/USD closes below 1.1717 and then loses 1.1686–1.1669, the breakout case is invalidated and the stance should be downgraded to Hold, as the pair would slip back into a broader range dominated by event-driven swings. Until those levels are broken decisively, the weight of evidence – DXY under 98.00, record gold and silver, intervention risk in USD/JPY, and a clean technical breakout – says the market is paying you to be long EUR against the dollar, not the other way around.

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